1 North Orange County Community College District North Orange County Community College District Proposed Budget

2 Introduction State Budget Impasse State Budget Impasse Assumptions primarily based on Governor’s May Revise Assumptions primarily based on Governor’s May Revise Cash Flow Concerns Cash Flow Concerns State’s Structural Deficit Continues State’s Structural Deficit Continues Current projection is $17.9 billion Current projection is $17.9 billion NOCCCD ongoing Deficit of $2.3 million includes: NOCCCD ongoing Deficit of $2.3 million includes: $2.5 million general apportionment deficit $2.5 million general apportionment deficit $3.2 million of non-faculty vacancies $3.2 million of non-faculty vacancies

3Introduction NOCCCD Priorities NOCCCD Priorities Address potential for unfavorable State budget Address potential for unfavorable State budget Potential mid-year budget reductions Potential mid-year budget reductions Address the ongoing deep categorical budget reductions Address the ongoing deep categorical budget reductions Increased Enrollment Demands Increased Enrollment Demands Negotiations/Staffing levels Negotiations/Staffing levels Completion of Construction Projects Completion of Construction Projects Retiree Benefits Retiree Benefits

4 Categorical Programs – On average, many categorical programs received ongoing cuts of approximately % On average, many categorical programs received ongoing cuts of approximately % One-time ARRA Backfill received of approximately $800,000 One-time ARRA Backfill received of approximately $800,000 Additional one-time District contribution given of approximately $1.3 million Additional one-time District contribution given of approximately $1.3 million

5 Categorical Programs – Despite reductions made in , several programs continue to have personnel costs in excess of State allocations Despite reductions made in , several programs continue to have personnel costs in excess of State allocations Estimated Unrestricted General Fund encroachment for of approximately $1.5 million – provided as one-time backfill for by campuses and District Estimated Unrestricted General Fund encroachment for of approximately $1.5 million – provided as one-time backfill for by campuses and District Further discussions are necessary Further discussions are necessary Campuses continue to apply for new grant opportunities Campuses continue to apply for new grant opportunities Potential for $5 million System-wide one-time backfill Potential for $5 million System-wide one-time backfill

6 Full-Time Equivalent Students (FTES) Actual FTES – 38, Actual FTES – 38, , FTES above target level 4, FTES above target level Funded FTES – 33, Funded FTES – 33, Resulted in 5,590.57; 16.88% of Actual FTES Unfunded Resulted in 5,590.57; 16.88% of Actual FTES Unfunded Targets established at 34, – essentially the same target levels as Targets established at 34, – essentially the same target levels as Cypress College – 11,030 Cypress College – 11,030 Fullerton College – 17,498 Fullerton College – 17,498 SCE – 6, SCE – 6,252.17

7 FTES Target projects 1,668.73; 5.04% unfunded FTES Target projects 1,668.73; 5.04% unfunded FTES Generating FTES above Target is Ideal…Without additional costs Generating FTES above Target is Ideal…Without additional costs

8 FTES Trends

9 Full-time Faculty Obligation Estimated Obligation – Estimated Obligation – Reinstated 14 of the 40 vacant positions eliminated from the budget in Reinstated 14 of the 40 vacant positions eliminated from the budget in Projected to be right at obligation for Projected to be right at obligation for Depending on the outcome of the State budget, obligation may change for Depending on the outcome of the State budget, obligation may change for No plans to fill vacancies beyond those needed to meet the obligation No plans to fill vacancies beyond those needed to meet the obligation

10 Ending Balances June 30, 2010

11 Ending Balance Board Policy Contingency Board Policy 6200 requires that unrestricted general reserves shall be no less than 5% of unrestricted general fund expenditures Board Policy 6200 requires that unrestricted general reserves shall be no less than 5% of unrestricted general fund expenditures Unrestricted General Fund Expenditures $206,385,831 Expenditures $206,385,831 Contingency level 5% Board Policy Contingency $ 10,319,292

12 Ending Balance Board Discretionary Contingency Board Discretionary Contingency of $4,475,453. Primarily consisting of: Board Discretionary Contingency of $4,475,453. Primarily consisting of: $2.3 million apportionment deficit below budget $2.3 million apportionment deficit below budget $465 thousand Medicare Part D Subsidy $465 thousand Medicare Part D Subsidy $460 thousand Lottery proceeds in excess of budget $460 thousand Lottery proceeds in excess of budget $846 thousand Utility Savings (actual expenditures below budget) $846 thousand Utility Savings (actual expenditures below budget)

13 Ending Balance - Districtwide Carryovers Districtwide carryovers of $6,608,327: Districtwide carryovers of $6,608,327: Master Plan - $133,600 Master Plan - $133,600 Facility emergency - $130,000 Facility emergency - $130,000 Safety supplies budget - $157,572 Safety supplies budget - $157,572 Information Services infrastructure budget - $3,751 Information Services infrastructure budget - $3,751 Staff development - $200,000 Staff development - $200,000 Election expense - $525,000 Election expense - $525,000

14 Ending Balance - Districtwide Carryovers Districtwide Carryovers (cont.): Districtwide Carryovers (cont.): Supplemental Retirement Plan - $137,404 Supplemental Retirement Plan - $137,404 Scheduled Maintenance contribution - $1,600,000 Scheduled Maintenance contribution - $1,600,000 Categorical contribution - $1,000,000 Categorical contribution - $1,000,000 Self-Insurance contribution - $1,221,000 Self-Insurance contribution - $1,221,000 Retiree Benefit contribution - $1,500,000 Retiree Benefit contribution - $1,500,000

15 Budget Center Carryovers

16 Apportionment Revenue – SB 361 The Proposed Budget contains no provision for 2.2% Growth funding – approx. $3.2 million

17 Revenues – Other Lottery - $3,999,720 Lottery - $3,999,720 $4 per FTES increase from prior year $4 per FTES increase from prior year Part-time Faculty Comp. - $996,501 Part-time Faculty Comp. - $996,501 Fee Waiver & Enrollment Fee - $322,051 Fee Waiver & Enrollment Fee - $322,051 Non-resident Tuition - $1,000,000 Non-resident Tuition - $1,000,000 Interest - $500,000 Interest - $500,000 Rates estimated at 0.73% (0.62% decrease from prior year) Rates estimated at 0.73% (0.62% decrease from prior year) Miscellaneous Income - $10,000 Miscellaneous Income - $10,000

18 Expenditures Salaries - $3.1 million increase Salaries - $3.1 million increase Step and Column increases and Reinstatement of 14 full- time faculty – approx. $1.3 million Step and Column increases and Reinstatement of 14 full- time faculty – approx. $1.3 million Medical Costs – 7% average increase – approx. $894,000 Medical Costs – 7% average increase – approx. $894,000 PERS rate – increase from 9.709% to % - approx. $600,000 PERS rate – increase from 9.709% to % - approx. $600,000 SUI rate – increase from 0.30% to 0.72% - approx. $363,000 SUI rate – increase from 0.30% to 0.72% - approx. $363,000 Retiree Benefits – $5,049,143 per actuarial study Retiree Benefits – $5,049,143 per actuarial study Extended Day Budgets – decreased by approx. $290 thousand: Extended Day Budgets – decreased by approx. $290 thousand: Adjusted for reinstated full-time faculty Adjusted for reinstated full-time faculty Adjusted for minor change in FTES target Adjusted for minor change in FTES target

19 Expenditures Energy Costs – $3.8 million – net savings approx. $472,000 Energy Costs – $3.8 million – net savings approx. $472,000 Reflects a net decrease due to decline in energy prices Reflects a net decrease due to decline in energy prices Reflects a net savings due to Cypress Cogen Reflects a net savings due to Cypress Cogen Factors increased costs for new facilities Factors increased costs for new facilities Child Care Program Contribution - $167,063 Child Care Program Contribution - $167,063 No ongoing contributions for Retiree Benefits or Self Insurance No ongoing contributions for Retiree Benefits or Self Insurance No ongoing budget for Scheduled Maintenance contribution No ongoing budget for Scheduled Maintenance contribution

20 Ongoing Revenues & Expenditures

21 Outstanding Issues Salary Negotiations Salary Negotiations Each 1% increase for Unrestricted General Fund positions is estimated at $1,024,049 Each 1% increase for Unrestricted General Fund positions is estimated at $1,024,049 Each 1% increase for Extended Day positions is estimated at $218,442 Each 1% increase for Extended Day positions is estimated at $218,442 No assumptions made for furloughs or salary roll-backs for No assumptions made for furloughs or salary roll-backs for Temporary Suspension of $1.5 million Retiree Benefits Fund Contribution Temporary Suspension of $1.5 million Retiree Benefits Fund Contribution Unpaid Balance as of June 30, $12 million Unpaid Balance as of June 30, $12 million

22 Outstanding Issues GASB 45 - Unfunded Retiree Liability GASB 45 - Unfunded Retiree Liability $166.1 million unfunded liability $166.1 million unfunded liability $12.4 million Annual Required Contribution (ARC) $12.4 million Annual Required Contribution (ARC) $4.8 million in pay-as-you-go costs ( ) $4.8 million in pay-as-you-go costs ( ) Unfunded ARC of $7.6 million Unfunded ARC of $7.6 million $50.6 million set aside in Retiree Benefits Fund $50.6 million set aside in Retiree Benefits Fund $5.0 million budgeted pay-as-you-go cost ( ) $5.0 million budgeted pay-as-you-go cost ( ) General Apportionment Deferrals General Apportionment Deferrals Cash Flow Concerns Cash Flow Concerns Interest Income directly impacted Interest Income directly impacted

23 Outstanding Issues Further decisions needed on deep ongoing cuts to categorical programs Further decisions needed on deep ongoing cuts to categorical programs Personnel costs in excess of State Allocations Personnel costs in excess of State Allocations One-time backfill provided, pending further discussions One-time backfill provided, pending further discussions Uncertain outcome of State Budget Uncertain outcome of State Budget 50% Law concerns 50% Law concerns Necessary Budget Reductions Necessary Budget Reductions Categorical Contributions Categorical Contributions Increases in PERS and STRS employer contribution rates could have a significant fiscal impact on future budgets Increases in PERS and STRS employer contribution rates could have a significant fiscal impact on future budgets

24 Current Reserves Board Policy Contingency - $10,319,292 Board Policy Contingency - $10,319,292 Board Discretionary Contingency - $2,126,834: Board Discretionary Contingency - $2,126,834: $ 4,475,453 As of June 30, 2010 (2,348,619) Ongoing Deficit (2,348,619) Ongoing Deficit $ 2,126,834

25 Questions? Proposed Budget